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Why the Lion Air Crash Has Led to U.S. Lawsuits: QuickTake

ByBob Van Voris and Harry Suhartono | Bloomberg

December 7

While investigators are still trying to figure out what caused budget Indonesian carrier Lion Air’s Flight 610 to crash in October, killing all 189 aboard, an initial focus has been on the plane’s flight-control system. That could make what would otherwise be a straightforward process for dealing with claims from victims’ families a much more litigious affair. The crash involved an Indonesian airline flying a domestic route with all but two people on board from Indonesia. But the 737 Max 8 plane was made by Boeing, a company based in the U.S., where courts historically have been far more generous to plaintiffs than anywhere else in the world.

1. How will claims be handled in Indonesia?

For a domestic flight such as this one, between Jakarta and the provincial capital of Pangkal Pinang, Indonesian law requires airlines to pay compensation for each fatality of 1.25 billion rupiah ($86,600). A spokesman for Lion Air said it’s adding an additional 50 million rupiah per passenger for lost baggage. If any of the passengers were on the flight as one leg of an international itinerary, their survivors are covered by the 1999 Montreal Convention, which applies to international travel. It requires the carrier to pay damages up to 113,100 in “Special Drawing Rights,” a currency unit created by the International Monetary Fund that is currently valued at $156,821. The rule applies even if the cause of the crash is unknown.

2. Do Lion Air families have other avenues of recourse?

They do if they’re able to establish a legal reason to act outside Indonesia. If another party, such as an airplane or component manufacturer, is arguably at fault, victims can sue using normal liability law. With questions swirling about the Boeing flight-control system, several suits have been filed against the company in the U.S. That’s not unusual. Victims typically prefer suing in the U.S. when possible because of favorable law and damage awards that tend to be higher than elsewhere in the world.

3. What have investigators said?

A preliminary report by Indonesia’s National Transportation Safety Committee showed that throughout the flight, faulty sensors were feeding a safety system incorrect readings and the pilots were continually battling to prevent it from forcing the nose of the plane down right up until the crash. The report also raised questions about the pilots’ actions and how maintenance was performed.

4. Is it difficult to prove cause?

It can be, and it can take years. The debate over what caused an Air France Concorde supersonic jet to explode in flames in 2000 continued for more than a decade.

5. What if a plane just disappears?

Malaysian Airline System Bhd made early payments to families in 2014, shortly after Flight 370 disappeared above the Indian Ocean. One complication can be differences in laws from country to country on what is required to declare someone dead without a body. Still, in cases where there’s evidence that someone was on a plane that crashed or disappeared, most courts can declare a passenger legally dead within weeks.

--With assistance from Alan Levin.

To contact the reporters on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net;Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

To contact the editors responsible for this story: Heather Smith at hsmith26@bloomberg.net, Lisa Beyer